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Closing Disclosure Transition For NSAs Will Last ‘Many Months’

Updated 9-23-15: Diane Thompson, Managing Counsel in the CFPB’s Office of Regulations, said that when the Closing Disclosure rule goes into effect on October 3, the agency will not come down hard on companies making a good faith effort to implement the rule, according to media reports.

Speaking at a Mortgage Bankers Association meeting September 21, Thompson said the agency is focused on helping the industry comply with the new mandates — including the Closing Disclosure.


Notary signing agents should expect to start seeing the Consumer Financial Protection Bureau’s (CFPB) new Closing Disclosure in late October or early November, but the transition period for fully implementing the form will last “many months.” 

The CFPB will focus on helping lenders fix problems rather than taking punitive action during the new Closing Disclosure transition.

The CFPB announced this week that it had finalized October 3, 2015 as the date the rule creating the Disclosure will go into effect. That means lenders will be expected to use the new Closing Disclosure form, which combines the current HUD-1 Settlement Statement and final Truth In Lending Statement, for most conventional residential mortgage applications submitted on or after October 3.

The mortgage disclosure rules were originally scheduled to be implemented on August 1, but the CFPB proposed the delay to correct an administrative error and give the mortgage industry some breathing room.

The Transition Period

The postponement raised questions about a previously announced enforcement grace period. However, in testimony before the Senate Banking Committee last week, CFPB Director Richard Cordray said that for “many months” after the rule goes into effect, the agency will concentrate on helping lenders fix problems rather than taking punitive action, according to numerous media reports.

The Closing Disclosure is part of the new TILA-RESPA Integrated Disclosures Rule, which is widely seen as the most significant development for the mortgage industry in many years.

For several months, mortgage industry executives have been encouraging NSAs to get training and familiarize themselves with the new Closing Disclosure before it goes into effect. Such training helps signing agents gain a competitive advantage as lenders prepare for October 3.

TRID Educational Resources And Terms To Know For Notaries

  • Here are several resources for NSAs to learn more about the TRID rule and the Closing Disclosure

The Texas Disclosure

In the meantime, the Texas Department of Insurance has announced that it is adding its own new disclosure as an addendum to the CFPB’s Closing Disclosure.

While the CFPB’s Disclosure “is designed to provide consumers with a better understanding of the costs of their real estate transactions, some of the changes conflict with Texas closing requirements and practices,” the TDI said in its announcement. “The Texas Disclosure adds important information to fully disclose the details of closing and of title insurance transactions.”

The department stressed that the Texas Disclosure will not replace the federal Closing Disclosure; it will be an addition to loan packages.

So NSAs in Texas will need to be familiar with that form as well.

Michael Lewis is Managing Editor of member publications for the National Notary Association.


Add your comment

Tim Gatewood

27 Jul 2015

This is typical. The feds come out with a rule that simplifies things for consumers by combining 2 or 3 disclosures into one and the industry fights it for months, then states add their own form instead of bringing their practices in line with the national standards. According to a report from Source of Title, the Ohio Land Title Association has come up with a form for their member title companies to add to the packages, as well. It's very frustrating how the states can't seem to work WITH the feds to give consumers simple, clear information.

John C. Plantada

28 Sep 2015

What is typical is the Federal government stepping in to "simplify" transactions, creating other problems, such as exists in Texas. I agree that lenders should be transparent; I disagree that real estate transactions should be handled by the unsophisticated consumer without the help of a professional. It is a rarity nowadays for a consumer to hire a real estate attorney or other real estate professional to protect his/her interests, relying on the mountain of regulation and the word of a mortgage or real estate broker. To save +/- $500, the consumer is willing to risk signing documents they don't understand or may be incorrect. The change essentially provides the same information in a different format. Even with the pre-October 3 change, a consumer has more than enough disclosure to ensure they are not being cheated. Nowadays, loan signing packages are stuffed with all types of defensive disclosures (probably at the insistence of lawyers for lenders) that most consumers don't even read, so that the lender can assert a defense in some future lawsuit that may or may not happen. The glut of disclosures has reached the point of diminishing returns, in that the consumer is so overwhelmed with documents, the importance of the ones that really matter wind up diluted. This is what has happened in an attempt to dumb down (simplify) loan documents.

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